Dogecoin Among Altcoins Seeing Deepest Trader Losses: DOGE Rebound Soon?
September 06 2024 - 2:00AM
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On-chain data shows that Dogecoin (DOGE) is among the altcoins that
have observed significant losses for 6-month traders, which may
help the coin’s price rebound. Dogecoin MVRV Suggests DOGE May Be
Offering A Buy Window In a new post on X, the on-chain analytics
firm Santiment has discussed how assets like Dogecoin and XRP (XRP)
have been looking like regarding trader returns on various
timeframes. The indicator of relevance here is the popular “Market
Value to Realized Value” (MVRV), which keeps track of the ratio
between the value that the investors of an asset as a whole are
holding (that is, the market cap) and the value that they put into
the asset (the realized cap). Related Reading: Bitcoin Could Drop
To $40,600 If This Happens, Crypto Analyst Says When the metric has
a value greater than 1, the investors are currently in a state of
net unrealized profit. On the other hand, it being under the cutoff
implies the dominance of loss in the market. Historically, whenever
the investors of a cryptocurrency have been in a state of high
profits, tops have become more probable to occur for its price, as
the likelihood of a mass selloff with the motive of profit-taking
becomes significant in such conditions. Similarly, bottoms in the
asset’s price have tended to take place when most of the investors
have been in losses and sellers have reached a state of exhaustion.
Based on these facts, Santiment has developed an “Opportunity &
Danger Zone Model,” which finds out how the mid-term versions of
the MVRV have diverged from the norm for the different coins in the
sector. Below is the chart for the model shared by the analytics
firm. The “mid-term” versions of the MVRV specifically target the
investors who bought inside 30-day, 90-day, and 6-month timeframes.
When the divergences of these metrics are positive for an asset, it
means said coin may be undervalued right now. Similarly, a negative
divergence suggests potential overvalued status. From the graph,
it’s visible that most of the altcoins are currently in the bullish
region, with some of them even seeing their divergence surpassing
the 1 level, corresponding to a region that Santiment classifies as
the “Opportunity Zone.” According to the analytics firm, Dogecoin,
Toncoin (TON), and Ethereum (ETH) have seen the lowest 6-month MVRV
values recently, with traders who bought them in the last six
months sitting at 32%, 23%, and 22% losses, respectively.
Interestingly, unlike these assets, XRP’s 6-month traders are in
profits instead. Related Reading: $170 Million In Crypto Longs Bite
The Dust As Bitcoin Plunges Under $57,000 “As a trader, if you
enjoy making profits, you WANT to be in assets where other traders
are in pain and seeing losses,” notes Santiment. Based on this,
Dogecoin may offer the best window among the top coins, while XRP
may be the worst option. DOGE Price At the time of writing,
Dogecoin is trading around $0.0975, down more than 3% over the past
week. Featured image from Dall-E, Santiment.net, chart from
TradingView.com
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